BULLISH DESCENT BLOCK
Definition
This pattern consists of three consecutive black candlesticks, each closing lower than the previous one in a downtrend. It is the counterpart of the Bearish Advanced Block Pattern.
Recognition Criteria
1. The market is currently defined by a dominant downward trend.
2. A black candlestick appears on the first day.
3. The following two days feature black candlesticks, each closing lower than the previous day’s close, and opening within the range of the previous day’s body.
4. The last two days have long lower shadows.
Pattern Requirements and Flexibility
The first candlestick of a Bullish Descent Block should be a normal or long black candlestick. The following consecutive black candlesticks must open within the range of the previous day’s body and close below the previous day’s close. The bodies of the three black candlesticks should progressively get shorter, while the lower shadows should become longer.
Trader’s Behavior
A strong black candlestick is followed by another black candlestick that closes below the previous close. With two consecutive black candlesticks, the downtrend seems secure, attracting more bears. On the third day, another black candlestick closes below the previous day’s close. While the three black candlesticks suggest bearish dominance, there are signs of weakness. Firstly, the bodies get progressively shorter, indicating increasing indecision. Secondly, each day opens within the range of the previous day’s body. Thirdly, the lower shadows are getting longer. Although the second and third days close lower, the distance between the closes is narrowing. This suggests the downtrend is losing momentum, and short traders should exercise caution.
Buy/Stop-Loss Levels
The confirmation level is determined as the midpoint of the last black candlestick’s body. Prices need to rise above this level for confirmation.
The stop-loss level is set at the lower of the last two lows. After a BUY signal, the stop-loss is triggered if prices decline instead of rising and either close below the stop-loss level or record two consecutive daily lows below it, without any bearish pattern being detected.